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ID: 2529670 • Letter: 0
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0 Required information [The following information applies to the questions displayed below Corrientes Company produces a single product in its Buenos Aires plant that currently sells for 6.20p per unit. Fixed costs are expected to amount to 55,000p for the year, and all variable manufacturing and administrative costs are expected to be incurred at a rate of 2.50p per unit. Corrientes has two salespeople who are paid strictly on a commission basis. Their commission is 9 percent of the sales revenue they generate. (Ignore income taxes.) (p denotes the peso, Argentina's national currency. Many countries use the peso as their national currency. On the day this exercise was written, Argentina's peso was worth 104 U.S. dollar.) Required s its current plans by spending an additional amount of 3,500p on advertising and increases the selling Enter your answer in pesos.) 1. Suppose management alter price to 7.20p per unit. Calculate the profit on 68,000 units. (Do not round intermediate calculation ProfitExplanation / Answer
Sales revenue (68,000 x 7.20 P)
489,600 p
Less: Variable cost
Manufacture & Admn. (68,000 x 2.50 p)
170,000 p
Sales commission @ 9 %
44,064 p
Total Variable cost
214,064 p
Contribution margin
275,536 p
Less: Fixed cost
55,000 p
Less: Advertising
3,500 p
Profit
217,036 p
Sales revenue (68,000 x 7.20 P)
489,600 p
Less: Variable cost
Manufacture & Admn. (68,000 x 2.50 p)
170,000 p
Sales commission @ 9 %
44,064 p
Total Variable cost
214,064 p
Contribution margin
275,536 p
Less: Fixed cost
55,000 p
Less: Advertising
3,500 p
Profit
217,036 p
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